Blog post

BPM in Banking – Back to Boring Old STP

By Kristin Moyer | October 21, 2008 | 1 Comment

Peter Redshaw and Jay Wolstenholme here.  One area that seemed to be making modest progress, up until the financial services crisis became more severe, was around the purchase and use of Business Process Management (BPM) tools and techniques. For years, the BPM team at Gartner and others have been preaching about the need to be more strategic, adventurous and innovative in their deployment. But mostly those cries fell on deaf ears and banks continued to use BPM as a point solution for making minor improvements in workflow and exception processing. Basically doing what they had always done, only a little bit slicker.

Back in 2007, though, it looked like maybe the tide was beginning to turn and banks might start actually re-engineering some of their processes and using BPM as a strategic advantage and competitive differentiator. But, that light at the end of the tunnel seems to have been extinguished now. Not forever, but certainly for a few months and maybe years.

What CIOs at banks will be looking for now (and the only thing they’ll get/give signed off funding for) is quick savings. So – disappointingly – it looks like a return to the old focus on straight-through processing (STP) and raising automation levels in the middle and back office. This reinforces their clear focus on cost savings – identifying where banks can they use fewer staff and get more accuracy, thereby raising fewer exceptions that need manual handling.

You can see this happening in an area like OTC Derivatives. The more complex and risky the product is, the less it is automated right now. This has led to huge backlogs in the middle and back office.

So, BPM will be focused on internal operations, e.g., the stuff that the bank does entirely within its own firewalls, and on tying this to an event-driven architecture. For inter-bank operations, they’ll be waiting for utilities to spring up, e.g. from the DTCC.

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1 Comment

  • Mary Knox says:

    I would be more inclined to see this as, not a shift away from innovation, but rather building the foundation for future innovation. Without automation and the ability to link all steps in a process chain — and more importantly across process chains, creating a process web — the opportunity for BPM-enabled innovation will be highly limlited, at best.